British started CPF, not pap.
The British colonial authority in Singapore introduced the CPF in 1955 as a compulsory savings scheme so as to allow workers to save for their retirement, 10 years after the end of the Japanese Occupation when people were struggling to make ends meet [CPF site -link]. So I hope that the Singaporeans must thank the right entity and not pap!
Who started the minimum sum?
The 1st generation pap started the minimum sum scheme(MSS) in 1986. It started $30,000. It was raised again by the second generation pap in 1993 to $40,000. It reached $80,000 in 2003. It was planned to reach $120,000 in 2013. The 3rd generation pap has decided to adjust for inflation. This means $155,000 in 2014 [see link]. In order for all to reach minimum sum, like savings in a bank, there are a few plausible ways.
1.Not keen to start minimum wage?
One of the possible ways is to have a minimum wage. This is only intuitive and logical. Otherwise how would we reach the minimum sum? Do note that currently only 49% of ACTIVE members reached the minimum sum. However, if all CPF members are included, Leong Sze Han postulated that about 1 in 8 meet the minimum sum[link]. Those who do not meet are required to pledge and top up in cash, property or the remaining CPF accounts[link]. However, the pap is not keen to have a minimum wage[link].
2.At least increase contributions?
One other suggestion is to increase contributions. The 1st generation pap had mandated contributions at the peak of 25% from BOTH employer and employee in 1985[link]. More tweaks were made for recession. At the 3rd generation pap, the contribution is now at the peak of 16% by employer and 20% employee. Is it possible to increase the contributions further? Otherwise, how many of us will reach the minimum sum? Perhaps, pap should not have tweaked the contributions as it is difficult to replace the contributions rates to the good old days. Changes in contribution rates will hurt the older low income workers[link]. In short, it was pap’s myopia that led to today’s altered contribution rates.
3.If not increase returns?
The other recommendation is to increase the annual returns from all 3 accounts in CPF. This was, it will help Singaporeans to reach the minimum sum at a faster rate. This, like the first suggestion is intuitive. The alternative parties have proposed this[link for NSP, link for WP, link for SDP,link for RP,link for LSH] and even pap backbenchers[link]. However, the current pap ministers have been quiet to date towards all these requests.
Temasek/GIC show off returns of investment, but not keen to give back these back to CPF?
There was an article(with owls) to show how much Temasek and GIC have gained since inception was 16%[link]. Reading this, it is indeed surprising that CPF is only getting 2.5% for OA and 4% for the rest.
To layman , GIC/Temasek indirectly use the Singapore and CPF funds for investment.
One of the quickest denial that MOF will state that Temasek and GIC is not DIRECTLY invest the CPF monies[link] .Perhaps, the denial is to delink the 16% gained during inception and the 2.5% for the Orindary account. The way CPF reaches GIC and Temasek is really complicated[link] to the layman. For most of us, it is just that the end results that we are concern, and yes our CPF is with Temasek and GIC for investment for simplicity.
Don’t waste time to show on Sunday Times that people will not be able to manage money.
Today, a page in the Sunday Times is dedicated to juxtapose a news on how a Malaysian , which has close to $1 million, has now nothing in just one year [link]. This is a total waste of space where it can be dedicated to articles on how to improve our current CPF system or the realted system of education and housing(or rather the lease of flats-we do not own them!)
Whither now? –Change governance and total revamp, not tweaks from the Highe$t paid Mini$ter$!
After all these years, the CPF system is indeed confusing. This is worsened with all the questions that were partially answered with no clarity or simplicity. Are Singaporeans going still cling onto the lost cause of pap revamping the system? It is likely that pap will tweak the CPF system as it has done all these years. The solution : Vote pap out! They are the highe$t paid Mini$ter in the world! Yet, they could not propose the best solutions to this. The only way Singaporeans can push for a CPF system change is to change governance.
Come 2015/16, Singaporeans have to unit for our last stand to vote pap out! Only will our CPF system be clearer and simpler!
Anson Be
TRS Contributor